d.light: Solar power for the poor

March 3, 2013

A girl in India, studying with d.light

About three decades ago, Donn Tice was an MBA student at the University of Michigan, studying with the late C.K. Prahalad, who was developing his argument that companies can make money and do good by creating products and services for the world’s poorest people. It’s an exciting notion, popularized in Prahalad’s influential 2004 book, The Fortune at the Bottom of the Pyramid.

Today, Donn Tice is the CEO of d.light, which sells solar-powered lanterns to the poor. He’s trying to prove that his teacher was right, that a fortune awaits those who can create and sell life-changing products that help the very poor.

The good news is that d.light is getting there. The company is now selling about 200,000 solar-powered lanterns and lighting systems a month in about 40 countries. By its own accounting, d. light has sold nearly 3 million solar lighting products and changed the lives of more than 13 million people. And, if all goes according to plan, the company will turn profitable this year.

“In addition to bring lighting to people who need it and power to people who can’t acccess it –which is our mission–we think we have the ability to demonstrate that this is a business model that works,” Donn told me, during a recent visit to the d.light offices in San Francisco. Earlier this year, d.light was recognized with the $1,500,000 Zayed Future Energy Prize.

d.light is a for-profit company started in 2007 by Stanford MBA students Ned Tozun and Sam Goldman, whose idea for solar-powered lights was born out of a Stanford Design School course called “Entrepreneurial Design for Extreme Affordability.” As a Peace Corps volunteer in Benin, Sam had seen a young boy badly burned by a kerosene lamp. Both founders knew that more than 2 billion people in the world don’t have access to reliable electricity. Venture-capital firm Draper Fisher Jurvetson, which sponsored the design contest, invested $250,000.

Donn Tice

Donn, meantime, had enjoyed a more conventional business career in the consumer products industry, running the Folger’s coffee business for P&G and helping to develop new products for Dreyer’s ice cream. While working with advanced nanotechnology to create stain and wrinkle-resistant fabric for a company called Nano-Tex, he decided to make a change.

“I woke up one day and realized that I was saving the world from stains,” he told me.

Through a networking group that looked at ways that entrepreneurs could help alleviate global poverty, Donn was introduced to investors who were considering putting money into d.light. He became an informal advisor to the company, joined the board when they closed their first found of financing in 2008, became chairman in 2010 and CEO about two years ago.

He’s glad he did: “I love the work. I love our customers. You bring something into their lives that changes their life. What’s not to like?”

One key to the success of d.light is the company’s willingness to listen to its customers. Senior executives visit rural villages in India or Africa, where most of the lanterns are sold. “The consumers really design our products,” Donn told me. “It’s what we used to do at P&G. Our teams tromp around in the dust with prototypes.”

By coincidence, Jacquelyn Novogratz, the founder of the non-profit Acumen Fund, an investor in d.light, wrote a blogpost the other day about a visit that she and a company executive named David Small had made to a d.light customer named Teresia in Benin. Teresia had bought a $40 lantern, borrowing the money to do so and paying it back at the rate of $3.50 a week–less, she said, than she used to pay for kerosene. She proceeds, at some length, to tell David Small how to improve the product: She’d like the light to be able to charge her phone, she’d like it to charge a radio because batteries are expensive, and couldn’t she have a way to hang the light from the ceiling?

Jacquelyn writes:

As I watch Teresia and David exchanging thoughts about consumer satisfaction, emotion swells inside. This is why I am doing this work. This is why I started Acumen: I am witnessing a conversation of equals, one between an empowered consumer and a businessman trying to serve her. Teresia is not pandering nor is she begging. David is neither self-satisfied with his own sense of benevolence, nor is he assuming he has the answers. Teresia may have next to nothing of material value in the world, but here she is, full of dignity, full of the confidence that comes with doing something for yourself and paying for it, to boot. Her eyes sparkle with curiosity and strength. Teresia has earned this conversation. David must continue to work for her loyalty and trust as a customer. In the process, both have the chance to be transformed.

Interesting, no? This helps explain what Donn says is the company’s competitive edge. “The really big thing that has changed is that we have pushed the whole market in the direction of a better quality product,” he says. “Consumers don’t want a cheap product. The product has to work, and it has to work for a long time.” d.light is now offering two or three year warranties on their lanterns, telling customers that the products should last for five years and designing them to last longer. “It’s really important that people trust what they buy,” he said. In other words, poor consumers are very much like you and me: They want a quality product at a good price from a company they trust.

d.light has raised about $20 million so far, including about $15 million from a mix of traditional venture investors like DFJ and Nexus India and from impact or social investors like Acumen and the Omidyar Network. The company borrowed about $3 million from Deutsche Bank, and it has brought in about $2 million in grants. It will probably need more capital, Donn says, to reach its goal of changing the lives of 100 million people by 2020.

“It’s great to celebrate our success,” he says, “but we shouldn’t rest until we’ve really moved the needle.” And proven that yes, there really is a fortune at the bottom of the pyramid.

Comments

Great post. I am following at least a half dozen these products, all versions of hanging lamp, lantern, and charger. since the potential market is so huge, no reason to worry about so many alternatives. Let a thousand flowers bloom.
I do hope the battery can be changed in the dLight. I haven’t ascertained that – perhaps you know?

Thanks for profiling a beneficial product for the bottom of the pyramid – it’s always great to see these efforts come to life! I just observed similar devices being sold in East Africa last week. Distribution, recovering payments, maintenance, and other efficiency barriers persist. It would be great to see examples of BOP service centers or technicians also. Do these companies train local vendors or residents to service the product, collect payments, or license them to produce knock-offs? Another opportunity for service industries underneath the BOP?